Youth premium puts a brake on cover: Older motorists can find cheaper insurance, but often with strict limitations. Paul Gosling reports

OLDER motorists can make big savings by taking out special 'low-risk' insurance policies. But they should check that the policies allow them any flexibility they need.

Rosita Sherrard contacted the Independent to express irritation that her insurance policy was preventing her sharing the driving of her Vauxhall Astra GTI on a forthcoming holiday.

Miss Sherrard, a production assistant at the BBC, was unhappy when her previous policy with the City of Westminster, arranged through the AA, rose in cost from pounds 660 to pounds 800. By switching to a Sun Alliance 50-plus policy she cut the premium to pounds 456.

But Miss Sherrard was surprised and cross when she found that Sun Alliance would not allow her 46-year-old friend, Olivia Freeman, head of information services with a leading company, to drive the vehicle, as she was too young.

To make matters worse, Sun Alliance refused to provide a temporary cover extension, even at a higher premium. Instead it suggested that she take out an alternative policy costing an extra pounds 200 per year. When Miss Sherrard spoke to a broker he said that no insurer would issue short-term cover for the holiday alone.

'My friend asked her insurers, and I asked other insurers, but all the insurers said no,' Miss Sherrard said.

'She can drive on her insurance, third party, but it can't be extended for comprehensive cover on my car. I could get anyone else who was over 50 to drive it, but not my friend.'

Sun Alliance says Miss Sherrard's case shows the importance of the right policy. Gail Roberts, underwriting manager at Sun Alliance, said: 'The only thing she can do is switch to another policy. Our only exception is for a husband or wife who is under 50, but over 35. This should have been clear to the customer when she took out the policy.

'The reason for the low premium is the inflexibility, making it a low-risk policy. Some of our customers over 50 may have children who visit once a year, and want to drive, but they can't do it. If they want flexibility, even once a year, they should take out a different policy.'

Sun Alliance's 50-plus policy is directly sold, not available through a broker, and targets low-mileage drivers in suburban locations, with no accidents for five years, driving an 'average family saloon'. Miss Sherrard was unusual in saving pounds 350 on her policy, Sun Alliance says. Savings are more commonly about pounds 50.

Some other insurers offer cheaper policies for older drivers. Guardian Royal Exchange has three age bands that provide discounts: if the main driver is 50 to 54 there is a 2.5 per cent reduction, 55 to 59 a 5 per cent saving, and 60 or over a 12.5 per cent discount. Younger drivers are allowed to use the vehicle, but regular use may lead to rate increases.

NIG Skandia, whose policies are available only through brokers, sells a 'careful driver policy', for drivers over 35, which may cut premiums by up to 14 per cent.

Direct Line does not offer special policies for older drivers, but stresses that quoted premiums reflect age. Its spokesman said motorists should not be impressed by the size of a discount, but look instead at the net figure. Direct Line said the cheapest premiums were for 60- to 70-year olds, and that after the age of 80 drivers' premiums started rising again. 'But they will still probably be paying less at 80 than at 50,' the spokesman said.

Some insurers offer extra facilities with policies for older drivers. Norwich Union's 'motoring gold' policy for 55- to 75-year olds includes an RAC accident retrieval service, plus accommodation where appropriate.

James Duffell of Norwich Union said: 'There is no 'no-claims discount', but it is only available if you have made no claims. You must be retired, as it makes you a better insurance risk. You are more likely to drive off-peak, more likely to be back before dark, less likely to drive in bad weather. It does allow for two nominated younger drivers if they are over 30. The 75 limit is for new customers, but we may ask for a doctor's opinion for existing customers who are older than that.'

Legal and General offers a policy for over-60s, which is about 20 per cent cheaper than its standard policy. L&G does allow younger drivers on the policy, and adds other facilities such as emergency illness cover. Zurich's 50-plus policy includes a special package of facilities, including overseas vehicle recovery. It says that because of this it is competitively priced, but not necessarily cheaper.

If a driver is in the situation faced by Miss Sherrard it is very difficult to obtain short-term cover to add to an existing policy. Insurers point out that the administration costs are a significant part of the costs of a policy, and most will not issue a policy for less than a year.

London and Edinburgh will sell policies for three months, at a cost of about 30 per cent of an annual premium. Sabre, whose policies can be bought only through an intermediary, sells three-month policies without any loading.

The better brokers will be in a position to find the most suitable policy, but they may be unable to match the prices of policies sold directly to the customer. The situation is complicated by some insurers refusing to sell some policies through brokers, by some brokers not being used by some insurers, and by some insurers providing different policies through different brokers.

(Photograph omitted)